Cyan, Inc. v. Beaver County Employees Retirement Fund

SLUSA’s amendment to the Securities Act of 1933 does not deprive state courts of jurisdiction over class actions only alleging violations of the 1933 Act and does not affect the 1933 Act’s removal ban.

Respondents brought a class action lawsuit alleging Petitioners provided materially misleading documents violating the Securities Act of 1933. Petitioners argued that state courts lacked jurisdiction after the federal securities laws were amended by the Securities Litigation Uniform Standards Act of 1988 (SLUSA). Petitioners claimed SLUSA’s amendments created an exception in §77v(a) stripping state courts’ jurisdiction over “covered class actions.” Respondents argued that SLUSA’s amendments did not affect state courts’ jurisdictions. The California Superior Court ruled in favor of the Respondents and California’s appellate courts denied review. The United States Supreme Court granted certiorari to resolve conflicting rulings about jurisdiction under SLUSA. The Court reasoned that §77v(a) grants state courts’ concurrent jurisdiction over class actions brought under the 1933 Act, and that SLUSA’s amendment limits this rule through an “exception” clause that ensures §77p of the title will govern in situations where the sections conflict. While the Respondents’ class action fell under the definition provided in §77p, the Court found that the section only limits certain class actions based on state law, making no mention of class actions based on federal law. The Court held that the plain language of SLUSA’s text does not alter state courts’ longstanding jurisdiction over class actions brought under the Securities Act of 1933. AFFIRMED.